Armed clashes on Saturday morning between the Rapid Support Forces and the Sudanese army have exacerbated Sudan's problems, especially at the economic and social levels.
Sudan took a series of economic measures after the removal of former President Omar al-Bashir, which led to currency devaluation and high inflation, but paved the way for communication with international financial institutions.
Sudan benefited in 2021 from the Heavily Indebted Poor Countries (HIPC) Initiative, and its external debt was reduced from $ 77.2 billion in 2020 to $ 62.4 billion in 2021, but the deterioration of the political situation in the country at the end of 2021 disrupted the results of this initiative, and negotiations with the Paris Club member countries were frozen.
There is no doubt that the outbreak of the armed conflict in the Sudan, and its continuation during the coming period, will complicate the economic situation at the local and external levels, and the priority of spending for the parties to the conflict will be not education, health or infrastructure, but will be directed largely to armaments and the requirements of steadfastness in this conflict.
Armed conflict and deepening crisis
If the armed conflict in Sudan does not end soon, it will have very negative consequences on macroeconomic indicators, as well as on the standard of living of individuals and families.
Sudan's GDP at the end of 2021 reached $ 34.3 billion, according to World Bank estimates, and the economic growth rate reached 0.3% at the end of 2022, according to estimates by the Central Bank of Sudan, and the escalation of the armed conflict would push the GDP down in terms of value and growth rates.
Here, the inevitable result will be an increase in poverty and unemployment rates, as available statistics show that the poverty rate in Sudan is at 46.5%. The unemployment rate, according to the estimates of the Unified Arab Economic Report for 2022, reached 19.8% in 2021. It should be noted that the figures on unemployment and poverty rates do not necessarily reflect reality, because regional and international institutions derive their data from the Sudanese Government.
The continuation of the armed conflict in Sudan would affect the exchange rate of the local currency, which already suffers from problems, as the exchange rate of the dollar against the Sudanese pound is 447 pounds, and the black market is expected to flourish, as well as a further decline in the value of the Sudanese pound.
An uncertain future for gold
Data from the Central Bank of Sudan for 2021 indicate that the value of foreign trade amounted to $ 13.6 billion, of which $ 4.2 billion for merchandise exports, while merchandise imports amounted to $ 9.4 billion, bringing the deficit in Sudan's trade balance in 2021 to $ 5.13 billion.
Gold was the most important commodity in the structure of Sudanese commodity exports, worth $ 2.06 billion, amounting to 49% of the total value of the country's merchandise exports.
In light of the armed conflict, gold will be the element that will be significantly affected negatively, because there is no security environment required to work in extracting, transporting or exporting it, as well as the revenues from gold exports will be disputed: will it return to the country to compensate for its foreign exchange deficit? Or will he keep it outside the country? Sudan is thus in even greater trouble for its limited foreign exchange resources.
The necessity of securing food
Although Sudan is an agricultural country with many food self-sufficiency and even the export of agricultural and food commodities, in June 2022 the World Food Programme (WFP) announced that all 18 states of Sudan are food insecure and that 15 million people in Sudan are facing a crisis of acute food insecurity.
Data from the Central Bank of Sudan for 2021 show that food imports amounted to $ 2.09 billion, representing 22.3% of the total merchandise imports.
As the armed conflict continues, the situation will become more complicated for food and food security in Sudan, with the disruption of facilities capable of producing food, food import facilities, as well as the difficulty of raising the foreign exchange needed to import food, which means that Sudan is on the verge of further food insecurity if the armed conflict continues.
High corruption rates
For many years, Sudan has been one of the 10 most corrupt countries in the world, but recently it dropped out of this ranking, not because of its anti-corruption efforts, but because of its higher corruption practices in other countries, and the entry of new countries that were not in this ranking.
According to the data of the Corruption Perceptions Index for 2022, Sudan ranked 162 out of 180 countries included in the index, and obtained 22 of the index's 100 scores. As the armed conflict continues, corruption will become more ferocious, as the inevitable assumption is that corruption is increasing at significant rates in conflict zones, and the case of Iraq, Libya and Yemen is the best evidence.
Magharem conflict
The armed conflict in Sudan is primarily a conflict for all its parties, as no region has witnessed such events, but all those who participated in it have lost, even if one party triumphed over another, and there are many areas that can be listed for pictures of the victims.
But we only refer to the economic and social spheres, as the alternative to armed conflict is to spend on development projects and to confront the poverty and unemployment that Sudan has been suffering from for decades.
With the end of the conflict, the two parties (victorious and defeated) will emerge each losing members of its forces, as well as financial resources, in addition to the general loss suffered by the country as a conflict area, not approached by foreign investments, as abandoned by local investments, and the country will be in a state of weakness, enabling regional and international projects to undermine it.